Beneficial ownership transparency of trusts in South Africa

Conclusion

South Africa’s efforts of implementing BOT reforms are at a critical stage. The strong commitment illustrated by the relevant government entities, and the fact that the Master’s Office has records of all trusts registered in South Africa, provides the country with a significant advantage in implementing BOT of trusts reforms. However, there is much work to do, requiring the cooperation from a large number of stakeholders.

This briefing borrows from the collective knowledge of international experience to identify key considerations and steps that South African regulators and policymakers can use in their attempts to reform the BOT of trusts. However, the briefing is developed from an external perspective, which means that there are organisational and political intricacies and bureaucratic considerations that will ultimately impact the implementation of any reforms.

Whilst the current focus is understandably on BOT reforms as it relates to legal entities, the BOT of trusts plays a significant role in achieving true transparency. As such, this briefing’s findings will empower policymakers to simultaneously implement reforms that improve the BOT of legal entities and legal arrangements.

Areas for future research

Even though care has been taken to consider as many perspectives as possible, the study informing this briefing does have limitations. In addition to the challenges defined above, there are areas where further research into the topic may provide useful insights into how to effectively implement BOT of trusts reform in South Africa.

• Defining the purpose of trusts: One intervention that could have a potential positive impact on the BOT of trusts in South Africa is clearly defining the purpose of trusts. Doing so will create certainty surrounding the use cases of trusts, and it may be possible to identify specific transactions that fall outside of the accepted purpose of trusts. However, doing so requires legislative intervention that will have significant impact on the administration of trusts in South Africa, and should, thus, be subject to thorough research to determine the impact and desirability of such an intervention.
• The balance between privacy and public interest in trust information: Whilst this briefing discusses the balance between protecting the privacy of individuals and the public interest of making trust information publicly available, the matter is complex and requires a level of research and analysis that is beyond the scope of this briefing.
• The interaction between trusts and public procurement: As mentioned above, the abuse of trusts in public procurement processes is a matter of concern. However, in-depth analysis of South Africa’s public procurement regulations and the existing tools available to prevent abuse of the public procurement system is beyond the scope of this briefing. More research is required to understand the gaps that allow for the abuse of trusts and which measures are required to address those gaps.
• Trusts and politically exposed persons (PEPs): Trusts can provide a useful vehicle for PEPs (previously known in South Africa as prominent influential persons, or PIPs) to hide their business interests and allow them to benefit from their positions of power without notice. Further research is required to understand the extent to which PEPs (including civil servants) abuse trusts in South Africa. Such research will provide insights on the desirability of putting special measures in place that apply only to trusts to which PEPs are party.
• Gender analysis [109]: The links between gender and BOT of trusts were not considered in this briefing. However, due to the prevalence of gender-based violence and economic exclusion of women and girls in South Africa, gender analysis will be important for any future discussions.
• Climate analysis: Trusts are relevant in the extractive sector and to land rehabilitation. BOT provides a useful accountability tool in the sustainable energy transition, and could potentially contribute to more equitable transformation of land ownership in South Africa. [110] South African law provides for special trusts that may have a direct impact on these considerations, which are not covered in this briefing.